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Onion Expert

What Is The Onion Market Doing?

Shay Myers - Saturday, September 13, 2014

As always, the weather, the market, and various parts of the business world can greatly affect the onion market. Here is the Onion Market update as of September 8, 2014:

 

Market: Packing is at full swing at most packing sheds here in the Northwest. While harvest is just beginning here in the Treasure Valley, Washington has been going hard for about a week.

 

Yields: Yields in Washington are about average somewhere in the 700-750 cwt range. Harvest is approaching the 25-30% completion at this point. Reds and whites are the bright spot in the market with prices in the double digits for whites with reds not too far behind.

Yields in Idaho/Oregon have been a bit light to start with, mostly as a result of IYSV and lack of water. Many shippers are offering smaller sized onions than what they are used to. This is adding some down pressure to the market, especially among the smaller sizes.

 

Freight: A continued lack of drivers continues to demand very strong freight prices. Prices are similar, at this point, to what they were during this time last year, but there is even less negotiation when it comes to rates. East coast rates for refers can be as high as $8-$8.50 for refrigerated trucks. If you are able, utilizing flat beds at this juncture in the season could save you as much as 15-20%.

Water Situation in World’s Largest Onion Growing Region

Shay Myers - Friday, July 04, 2014

While California is short on water, as far as onions are concerned, it looks like they will not be short on supply.  Much like the case in many onions regions, onions are the number one cash crop and consequently are the last to go without water. 

 

 

 


Oregon and Idaho are in similar situations as far as water is concerned, although the NW is much further from harvest compared to California.  In the Snake River Valley that runs through Eastern Oregon and Western Idaho, there are thousands of acres left fallow this year.  That doesn’t mean there are no onions planted in valley regions though.  In fact, it is because of these fallow lands that many farms are still hoping to be able to finish their onion crop.  By taking water normally allotted for these fields that are not being irrigated, they are hoping to finish their onion crop.  It is not so much a question now of the quantity of water available to these farmers, instead it is a function of the length of time that the water will be flowing for irrigation.  Some estimates are saying July 27th others are speculating water availability until August 10th.  It doesn’t seem like much, but the 14 days in difference between the 27th of July and the 10th of August will literally make or break the onion crop on thousands of acres.   


Transportation is currently a major issue and will continue to be a MAJOR challenge for the foreseeable future.  Reefer rates from California to East Coast locations are as high as $9,000 -$10,000 and even more so are hard to find.  Railex is helping to alleviate some of this pressure for those that can use its service.   

   

Prices have firmed up significantly on all colors and sizes over the past 2 weeks.  This is due in part to the Imperial Valley finishing up and reduces the number of shippers with product available for shipment.  July is traditionally the most expensive onion month of the summer with low double digits quite common.  It looks like this may be the case this year as well, but only time will tell.     

The Art of the Onion Contract

Blake Branen Rosencrantz - Thursday, June 05, 2014
For those who don’t deal with onions on a daily basis, onion contracts can seem like a foreign concept. We’d like to share our knowledge of the onion market so that you can have a better understanding of the benefits contracts offer – for your day-to-day business and your bottom line. Shay Myers, a local Grower/Shipper, and John Vlahandreas, a Veteran Onion Buyer, answer the FAQ’s regarding contracts based on their years of experience:

 

When is a good time to contract?

Shay- The best time for a customer to come to me for a contract is a month or more before my planting season even starts. There are many ways to grow an onion: you can focus on size, single centers, storability, sweetness, pungency, duration of season, or any other variable. If I know what to grow and how to grow it, I can assure the best results for my customers. That is why buying from a true grower/shipper/marketer is so important. While custom packers have volume, they have little control over the growing process.

 

John - Know what your customer’s needs are and what they are doing with their onions. Some may need onions more suitable to food service and others to the retail market. Knowing when to switch from old crop to new crop is also key. Contracts should be setup a month before the start of planting. This will assure the most consistent and competitive pricing. Contracting without the outbound business there is a gamble, but if you have committed customers you should contract year round.

 

 

Who should contract?

John - If you are in food service, processing, or other areas with consistent outbound pricing you should contract; anything with a structured retail price. Worst case scenario you should be at least 50% contracted. This will help hold you average and protect you in high and low markets.

 

Shay - I agree with John on all points except one. History has shown that the average “spot market” prices are $1-1.50 higher than the average contract price. So if you are going to error, error on the side of a contract. On average you will come out a winner. Also take into consideration that if a contract is higher than the “spot market” you are usually talking about $.50 to $1.50. On the other hand, if the “spot market” is higher than the contract you may be talking as much as $10-$15! See the graph below for a clear picture of the savings.

 

With whom should you contract?

Shay - As a Grower/Shipper, of course I think you should contract directly with the grower. Working directly with the grower you can get your onions grown the way you need them, especially if you go to them early. If you contract with a “custom packer” you won’t have the same type of control. They will bring onions in from many different growers, almost all of whom are looking at maximizing their yields, which may have an impact on your quality and length of shelf life.

 

John - Contract with the person you are the most comfortable with. You may wish to contract with a larger company because they will have more shippers to turn to cover a contract. It may also be smart to split up your contracts. You could do one with a marketer (broker) and one directly with a shipper.

 

Why may onion contracts be more important than contracts for other agricultural commodities?

John - Onions are used in large volume across the country. Onions have a tendency to go up and stay up, unlike leafy items that go up in price, but quickly come back down. A contract will give you a steady control over the price of your onions so you don’t lose money in a time of high fluctuation.

 

Shay -Onions are not like other commodities, they are sold on a world market. Weather, draught, and disease in places thousands of miles from the USA can have dramatic impacts on the market here in the USA. On the other hand, commodities that can’t be shipped across entire oceans, and are destined to be sold domestically, tend to be less volatile over the long- term.

 

 

Some would argue that following a year with high prices, that it is a wise time not to contract as farmers like to “chase money”, but with onions that isn’t always a wise move. Like other commodities, the down swing on onions may be 20% when compared to the spot market, but the upswing can vary from many other commodities. Instead of seeing just 20-40% on the upswing of the market, as is generally the case with ag commodities, it is not uncommon to see increases of 200% or more when it comes to onions. In other words if you don’t have a contract, it doesn’t take long to wish that you did.





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